Schumer unveils plan to allocate federal bailout cash to local districts

By Rick Karlin

ALBANY — In the past few months, the federal government has engineered massive bailouts of distressed economic institutions from Wall Street to the Big Three automakers.

But for the upcoming stimulus package, politicians want to shore up local governments — from counties beset by Medicaid costs to local school districts forced to deal with cuts to state funding.

“There’s a very strong likelihood that (school aid) will be included in the package,” U.S. Sen. Charles Schumer (D-N.Y.) said Monday as he unveiled a plan — being pushed by several governors as well as members of Congress — to allocate stimulus money to local school systems.

If approved as part of President-elect Barack Obama’s $750 billion package, New York could get an extra $6.4 billion in local school aid over the next two years.

“It’s going to put less stress on the local school districts,” said Gov. David Paterson, who joined Schumer for a news conference at the state Capitol.

It marked the second time in two weeks that Schumer said he wants stimulus funds to pay for ongoing local government functions.

Last week, Schumer announced he was pushing to include $5 billion worth of additional Medicaid funds in the stimulus package. If Congress and Obama adopt Schumer’s suggestion, counties statewide would get hundreds of millions of dollars for their Medicaid expenses over the next two years.

Similarly, the proposed education plan would send money to the state’s roughly 700 school districts, with amounts allocated according to the formula used to determine state aid. The money could help school districts avoid steep increases in property taxes, Schumer and Paterson said.

Fiscal conservatives assailed the idea, saying it amounts to using emergency stimulus dollars to fund ongoing government operations.

“This is not about helping states; this is about helping teachers unions,” charged J.D. Foster, a senior fellow with the Heritage Foundation.

Foster noted that teachers and other public employees are continuing to get regular raises and generous benefits even as record numbers of people in the private sector are losing their jobs.

“This is really turning into a massive panderfest like we’ve never had before,” added Edmund McMahon, director of the Empire Center for New York State Policy.

“When did the feds get into underwriting operating expenses for the nation’s most expensive school districts?”

“The critics are off base,” responded Richard Iannuzzi, president of New York State United Teachers. He said the plan was supported by business leaders around the state who understand that schools are training future members of New York’s workforce.

Schumer also said the school money could stave off layoffs of teachers and other school employees.

That’s a growing possibility, said David Albert, spokesman for the state School Boards Association, who noted that boards are starting to craft their budgets for the next fiscal year, which begins in April.

“Within the next four to six weeks, you’re going to start to see the draft budgets come out, and you’re going to see the magnitude of layoffs,” Albert said.

Schools from Syracuse to the Rochester area and even in Galway, Saratoga County, are looking at staff reductions by layoffs or attrition, he said.
About one-third of the planned $750 billion stimulus package would go to state aid. Also included in Obama’s plan are funds for infrastructure projects and a middle-class tax cut.

Schumer said the House and Senate were hoping to have the package on Obama’s desk by Feb. 13 — which Paterson noted falls on a Friday.

Both men deflected questions about the governor’s plans to fill the state’s junior senator slot, which will presumably soon be vacant due to Sen. Hillary Rodham Clinton’s nomination as Obama’s Secretary of State. Schumer will introduce her to the Senate’s Foreign Relations Committee as hearings begin today.

Paterson defended his decision not to release the 28-page questionnaire’s completed by several Senate hopefuls, including Rep. Kirsten Gillibrand (D-Greenport) and Caroline Kennedy. Paterson said their answers were for his own private use in making the decision.

Paterson jokingly suggested giving Schumer both posts. “Let Charles do it,” he said.

“David, I thought you were my friend,” Schumer said.